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Amazon reports higher sales for quarter

Amazon.com sales in the second quarter were up 37% compared with a year earlier, while the net loss for the period was halved.

The company recorded net sales of $1.1bn (£688m) in the quarter ending 30 June, up from $806m a year earlier. It made a net loss for the quarter of $43.3m (£27m), down from $93.6m in 2002.

Excluding stock-based compensation, amortisation of goodwill, restructuring and other charges and the effects of changes in accounting principles, the company made a net profit of $42m (£26m) on the quarter, up from a net loss of $4m a year earlier.

The jump in sales was fuelled by low pricing and free shipping, measures the company had funded by cutting TV and print advertising spending.

The online retailer sold 1.4 million copies of JK Rowling's fifth Harry Potter novel, Harry Potter and the Order of the Phoenix, in June.

The book has a list price of $29.99 (£19) but is sold by Amazon on its website for $17.99 (£11.24), netting the company revenue of around $25m, more than 2% of its sales.

To keep its shipping costs down, the company used cheaper packaging, chief finance officer Tom Szkutak said.

Amazon sees sales growth slowing and net sales coming in around $1.08bn (£675m) to $1.15bn through the third quarter, up 26% to 35% compared with the same quarter a year ago. For the full year, it predicts net sales of $4.9bn (£3bn) to $5.1bn.

Szkutak predicted Amazon would show "more innovation in the next eight years than in the eight years since 1995", when the company began selling books over the web.

In particular, he said, there will be more third-party sellers doing business through the site. In the second quarter, 20% of items sold through Amazon's websites in the quarter were new, used and refurbished items sold by third parties, up from 14% a year ago.

Amazon's website already allows you to order soup for dogs and nuts for assemblingcomputer cases. However, items such as books, music, films, games, software and magazines still accounted for 79% of sales in the second quarter, compared with 81% a year ago.

Peter Sayer writes for IDG News Service


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